As Apple, Google and Samsung have swept Microsoft under the carpet over the last few years, the one-time tech titan wants back onto the fast-track to play with the big boys. Although Microsoft had been working with Nokia on a Windows based phone since 2011, Microsoft felt that they had to take control of their Windows Phone platform without any middleman getting in the way of their mobile vision which is currently on crutches. Late yesterday evening, Microsoft crossed the Finnish line and acquired Nokia's Devices and Services division.
In brief, the deal breaks down as follows: Microsoft is paying 7.2 Billion for Nokia's Devices & Services division, along with a four-year exclusive partnership with HERE Maps (which Nokia retains), all of Nokia's phone brands, including Lumia and Asha, its employees, marketing materials, sales force, manufacturing facilities and trade partnerships; and a 10-year non-exclusive lease of Nokia's patents and IP.
In a joint open letter published on the Official Microsoft Blog late yesterday evening, Ballmer and Elop noted that "Today marks a moment of reinvention."
Top Nokia execs, including CEO Stephen Elop, Jo Harlow, Juha Putkiranta, Timo Toikkanen, and Chris Weber will transfer to Microsoft as employees. In total, some 32,000 Nokia employees are expected to transfer to Microsoft, including some 4,700 people in Finland, the company said.
Microsoft "is still behind Apple and Android-based handset devices in the global mobile phones market share but under this deal, Microsoft can start to take control of the operation and turn Nokia's declining handset business into a formidable competitor in a competitive market," said India's ETX Capital analyst Ishaq Siddiqi.
A Good Patent Play for Microsoft
According to Reuters, "Nokia has long been a savvy player in the intellectual property market. It sued Apple in 2009 and then reached a licensing deal with the iPhone maker. The terms were not disclosed but the deal was believed to be worth hundreds of millions of dollars to Nokia.
For Microsoft, taking a license to Nokia's patents - but not buying them - serves a strategic objective as well. Microsoft has already convinced about 20 Android manufacturers to pay patent royalties, part of Microsoft's effort to raise the cost of Google's mobile operating system.
Now, Nokia remains free to go after those Android manufacturers for royalties as well. 'It wouldn't surprise me at all to see litigation filed by Nokia in coming months,' said one senior IP executive who has dealt with both companies but did not want to be identified to maintain those relationships."
You could also read FOSS Patents report on the acquisition and get an overview of Mueller's thinking about Microsoft's patent play.
At the End of the Day
At the end of the day, time will tell if this acquisition will actually mean anything tangible for Microsoft – but it sure would be nice if they'd get serious and take Android head on. There's a desperate need for a strong second open operating system that might actually challenge the market.
Android is such a cheap looking toy OS that I still can't believe that they have a lead in the market. Apple could wipe them out in a nano second if they'd just licence their iOS to a few key players instead of fighting it out in the courts. If the objective was to go thermonuclear to wipe Android out of existence, then the legal approach that the late Steve Jobs took was sadly the wrong strategy. Only licensing could have achieved that and still could. But that's a broken record no one is listening to.
For now, if you have anything interesting to say about the Microsoft deal, please send your comments in below.